[Anatomy of the Market]
Yesterday's Politburo meeting was quite powerful, directly leading to an overnight surge of over 10% in the Chinese concept stocks index in the U.S. market, with Fangduoduo briefly doubling and other varieties soaring collectively. However, today both markets opened significantly higher but then fell all the way down, with the Hong Kong stock market closing down 0.50%. The gap was completely filled. The trading volume approached 250 billion.
There has been plenty of interpretation regarding this meeting, but in short, it certainly exceeded expectations, with many expressions differing from before. For instance, in terms of policy orientation, &#34;extraordinary counter-cyclical adjustment&#34; appeared for the first time in history; regarding monetary policy, &#34;moderately loose monetary policy&#34; was last proposed in 2010; and in terms of fiscal policy, &#34;proactive&#34; was changed to &#34;more proactive,&#34; which was last mentioned in 2020. Some skeptics might say that without specific data or clear guiding numbers, it’s all just talk. If one insists on that, then it can only be said that this is how small essays work: first set the target high, and then anything below that target is deemed as not meeting expectations. This routine has been played for a long time; can we try a different approach?
So why did the market open high and then decline? This reason seems to respect statistics. Looking at a set of data, since 2010, there have been 62 instances when the Shanghai Composite Index opened 1% higher, of which it fell after opening high 34 times and rose 28 times; when the index opened 2% higher, there were 13 instances, with 11 falling and 2 rising. Today, the Shanghai Composite Index opened 2.58% higher, while the Hong Kong market opened 3.21% higher, so it’s highly probable that it would open high and then fall, which is not unusual, unless it’s a reversal market that would open high and rise, which does not mean that the policy is not meeting expectations. Some continue to say that since the policy is so strong, it should be different and should go straight up. However, it is essential to clarify that under the current global environment, no matter how strong China is, it cannot be isolated, unless it’s the United States, which has no choice; the worse the global situation, the more it becomes a safe haven. We are not at that level yet. It can only be said that certain aspects are in place, but many others cannot be built overnight, such as soft power.
Once these points are understood, today’s market situation becomes easier to comprehend. The securities sector that had already started rising yesterday opened high this morning, providing an opportunity to cash out. The same goes for insurance and real estate. It’s all about speculating on expectations, so there’s no need to get too deeply involved.
Countermeasures are here again, this time from NVIDIA. On the evening of December 9, the State Administration for Market Regulation of China announced that it has recently launched an investigation into NVIDIA for allegedly violating the Anti-Monopoly Law of the People's Republic of China and the announcement regarding the anti-monopoly review decision on NVIDIA's acquisition of Mellanox Technologies (Market Regulation Administration Announcement [2020] No. 16). The reasons are quite sufficient, as similar investigations have been conducted in the U.S. and Europe. The key point is that the timing is very sensitive, with recent countermeasures against small metals and initiatives not to purchase foreign chips, so it was only a matter of time for NVIDIA. The confidence comes from the strong rise of Chinese manufacturing; although there is still a gap at the highest end, it can be compensated in other ways. Holding onto fantasies is no longer possible, so it’s better to take the initiative and break through. Following this logic, many industries will face similar situations, such as the drone sector, where media reported on December 10 that the escalating trade conflicts between China and the U.S. have extended to the drone field
The Chinese government is expected to tighten export controls on drones as early as January next year. However, there are no related stocks in the Hong Kong market.
Today, the market continued to favor robotics. On December 10th, local time, Tesla's official robot account released a video showcasing the latest progress of its humanoid robot, Optimus, walking on complex terrain. The Tesla robot team selected three locations covered with weeds and fallen leaves, with the ground slope reaching up to about 30 degrees. From the video, it can be seen that Optimus can not only walk uphill but also downhill. Although it appears somewhat clumsy compared to an average person, its walking speed is similar to that of an ordinary person, and it did not fall at any point. Tesla expects that by the end of this year, the Optimus device will perform a series of useful tasks in factories, with the company's goal to sell these robots externally by the end of 2025. The plan is to start small-scale trial production of Optimus robots by the end of 2024, with an expected production of thousands to ten thousand units throughout 2025 for internal use and training. Although robots have not yet entered large-scale applications, the direction is irreversible. Microbotics-B (02252) rose by 8.7%, while SuTong JuChuang (02498) and UBTECH (09880) have performed well this year.
The consumer sector is also a key focus of policy efforts. Ranked first, &#34;Hong Kong's first domestic cosmetics stock&#34; Mao Ge Ping (01318) opened 59.90% higher on its first day of listing. Public information shows that the public offering subscription amount for Mao Ge Ping's Hong Kong IPO reached HKD 173.814 billion, with an oversubscription rate exceeding 826.27 times, making it the &#34;frozen capital king&#34; in this year's Hong Kong IPO market. The stock showed a steady upward trend throughout the day. Other sectors responding include home appliances and dairy, such as Hisense Home Appliances (00921) and China Feihe (06186). The film and television sector is also taking action, with the total box office of domestic films reversing the downward trend, and films for the 2025 Spring Festival gradually being scheduled. Related stocks include Maoyan Entertainment (01896), Alibaba Pictures (01060), and China Ruyi (00136).
Recently active AI stocks are generally in a state of adjustment, but MaiFuShi (02556) has emerged strongly. This is due to MaiFuShi's consumer attributes, as the company recently reached a strategic cooperation agreement with Rukang Group for digital intelligence. The two parties will jointly launch a new blueprint for all-channel marketing and operational digital intelligence in the beef and lamb food sector, empowering Rukang Group to enhance quality and efficiency in both B2B and B2C directions. Previously, MaiFuShi's precision marketing brand &#34;Kaililong&#34; held a strategic cooperation launch ceremony with &#34;Kangaroo Mom Group&#34; in Guangzhou, involving a 600 million strategic cooperation. This demonstrates the power of dual attributes. Today, it surged over 14%. Another retail stock, GaoXin Retail (06808), announced that it received a letter of intent from a potential offeror regarding the acquisition of all company shares, with discussions between Alibaba and the interested offeror still &#34;ongoing,&#34; rising over 5% today. Investors should closely monitor subsequent news, as it seems the offer for acquisition may be imminent. Today, it also rose over 5%.
Shanghai has issued the &#34;Shanghai Action Plan to Support Mergers and Acquisitions and Restructuring of Listed Companies (2025-2027)&#34;: It aims to establish a number of representative merger cases in key industries by 2027, cultivating about 10 listed companies with international competitiveness in key industries such as integrated circuits, biomedicine, and new materials, forming a merger transaction scale of 300 billion yuan, activating total assets exceeding 2 trillion yuan, and gathering 3-5 professional merger fund managers with strong industry influence
Shanghai Electric (02727) plans to publicly transfer 100% equity of Suning Company to focus on core equipment, which aligns with this policy. Others include Shanghai Fudan (01385), Guotai Junan (02611), etc.
In pre-market trading, Chinese concept stocks in the US fell broadly, with the 3x long FTSE China ETF down nearly 12%. On the morning of December 10, President Xi Jinping met with the heads of major international economic organizations attending the &#34;1+10&#34; dialogue in Beijing and pointed out that China has full confidence in achieving this year's economic growth target and will continue to play the role of the world's largest engine for economic growth. Today's adjustment is very normal, and the future will reflect confidence.
【Sector Focus】
Recently, news of price increases from copper foil manufacturers for circuit boards has spread. Copper-clad board manufacturers have received price increase notices due to rising labor costs and other expenses, with different products experiencing varying price increases. The processing fee for copper foil has increased by 10%, which may drive up the prices of copper-clad boards and circuit boards. The key raw material for copper-clad boards, fiberglass, has already issued a price increase notice. The price of copper foil consists of raw material and processing costs, with manufacturers negotiating prices with copper-clad board and flexible copper-clad board manufacturers every three months. Raw material prices are linked to the London Stock Exchange, and this time the main increase is in processing costs, involving increases in labor, logistics, etc., whereas in the past, increases were mainly due to rising electricity costs and the price of surface treatment agents for copper foil. Japan's largest electrolytic copper foil producer, Mitsui Mining &amp; Smelting, mentioned price increases for ultra-thin electrolytic copper foil in its August financial results briefing, holding a 90% global market share in the mobile phone IC substrate field, giving it significant bargaining power. Some electrolytic and rolled copper foil manufacturers have also raised prices and penetrated the market.
Related stocks in the Hong Kong market: Kingboard Laminates (01888), Kingboard Group (00148).
【Stock Picking】
Zoomlion Heavy Industry Science and Technology Co., Ltd. (01157): Net profit attributable to the parent company increased year-on-year, with a rapid rise in overseas revenue proportion.
In November 2024, domestic sales of excavators grew by 20.5% year-on-year, continuing the growth and outperforming CME expectations. In terms of exports, excavator exports in November 2024 increased by 15.2% year-on-year, with the growth rate of monthly export sales expanding. From January to September 2024, the company achieved revenue of 34.39 billion yuan (yoy -3.2%), with a net profit attributable to the parent company of 3.14 billion yuan (yoy +10.0%).
Comment: Leading profitability, in the first three quarters of 2024, the company's gross profit margin and net profit margin were 28.4% and 9.1%, respectively, increasing by 0.6 percentage points and 1.1 percentage points year-on-year. In the first three quarters, the company's concrete machinery exports grew rapidly, with a significant increase in overseas market share, and the penetration rate of electric mixer truck models rising to over 50%; the overall market share of engineering lifting machinery ranks among the top, with the market share of 25-55 ton core truck cranes ranking first in the industry and the market share of crawler cranes over 1000 tons also ranking first in the industry; the market share of construction lifting machinery remains the largest globally, with a rapidly increasing proportion of overseas revenue. The company's emerging sectors continue to grow rapidly, significantly enhancing its industry position. As of the end of September, the revenue share of new sectors such as earthmoving, high-altitude, agricultural machinery, and mining has exceeded 50%, further optimizing the product structure. The overseas business has diversified growth: in the first three quarters, the company achieved rapid growth in emerging potential markets such as South America, Africa, and South Asia; in traditional markets such as the EU and North America, it also achieved rapid growth. The localization layout of overseas operations is becoming increasingly complete
As of the end of September, the localization rate of overseas business reached approximately 90%. The company continues to pay dividends and values shareholder returns. In the third quarter of 2024, the company conducted a cash dividend of nearly 2.8 billion yuan; recently, the company also announced the repurchase and cancellation of some H shares.
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After yesterday's Politburo meeting, the US stock market's China concept index surged significantly, while the Hong Kong stock market opened higher but closed down 0.50%. The content of the meeting exceeded expectations, with policy statements differing from the past, emphasizing "extraordinary counter-cyclical adjustments" and "more proactive" fiscal policies. Although the market opened higher, historical data shows that it is quite common for the market to decline after a higher opening, reflecting the impact of the global economic environment on the Chinese market

- The recent Politburo meeting led to a significant rise in U.S. Chinese concept stocks, but markets in Hong Kong and Shanghai opened high and then declined, with the Hang Seng Index closing down 0.50%.  
- The meeting introduced unprecedented policy language, indicating a shift towards more aggressive monetary and fiscal measures, yet market reactions suggest skepticism about the effectiveness of these policies.  
- Additionally, regulatory actions against Nvidia and rising costs in the copper foil industry are influencing market dynamics, while companies like Zhonglian Heavy Industry report strong growth in both domestic and international sales.

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Zhitong Hong Kong Stock Analysis | Opening high and closing low is a routine, no need to panic. Shanghai issues support for mergers and acquisitions